Submitting Investment Declaration Is a Matter of Concern for Most of Us

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Guidelines For Submission Of Investment Proofs

Table of Contents

List of Exemptions:-

A.Exemption under Section 10

B.Exemption under Chapter VI A

C.Exemption under Section 80C

D.Exemption under Section 24

A.Exemption under section 10

House Rent Allowance

Medical Reimbursements

Flexi Benefit Plan

Conveyance Allowance

A) House Rent Allowance (HRA)

B) Medical Reimbursement (Maximum Amount – Rs. 15,000 per annum)

C) Flexi Benefit Plan (FBP) (Maximum Amount – As defined in your salary structure)

D) Conveyance Allowance (Maximum Amount Rs. 800 per month)

B.Exemption under Chapter VI A

Section 80D - Medical Insurance

Section80DD – Maintenance/Medical treatment of Handicapped Dependent

Section 80E – Education Loan Interest Benefit

Section 80U – Handicapped/ Self-Disability

A) 80D - Medical Insurance - Maximum Amount- Rs. 15,000 or Rs. 20,000 (in case of parents above 65 yrs of age)

B) 80DD Maintenance /Medical treatment of Handicapped Dependents

C) 80E Education Loan Interest Benefit

D) 80U Deduction in case of Disability-Self

C.Exemption under Section 80C – (Maximum Amount – Rs.100, 000)

Life Insurance Premium

PPF (Public Provident Fund)

Fixed Deposit in a bank

Investments in ULIP, Mutual Funds/ELSS, Infrastructure Bond, NSC etc.

Children Education Fees

Five Year Time Deposit in Post Office Saving Scheme

Housing Loan (Principal Loan) Repayment/ Registration/ Stamp Duty

A) Life Insurance Premium

B) PPF (Public Provident Fund)

C) Fixed Deposit in a Bank

D) investments in ULIP, Mutual Funds / ELSS, Infrastructure Bond, NSC, Postal Deposits

E) Children Education Fees

F) Five Year Time Deposit Scheme in Post Office

G) Housing Loan PrincipalRegistration/ Stamp Duty Loan

D.Exemption under Section 24

Exemption against Interest on Housing Loan, if self occupied (Maximum Amount – Rs.1, 50,000)

Exemption against Interest on Housing Loan, if the loan is taken before April 1, 1999 (Maximum Amount – Rs.30, 000)

Tax Calculation Sheet

Submitting investment declaration is a matter of concern for most of us. The most important documents in an investment declaration process are the investment proofs. So, let us understand what all investment proofsare required to be submitted for claiming taxexemption.

There are various sections under which you can claim exemptions. Here isthe list of exemptionswith the required proofs to be submitted.

List of Exemptions:-

A.Exemption under Section 10

B.Exemption under Chapter VI A

C.Exemption under Section 80C

D.Exemption under Section 24

A.Exemption under section 10

Following are the heads under which you can claim tax exemption under this section:

House Rent Allowance

Medical Reimbursements

Flexi Benefit Plan

Conveyance Allowance

A) House Rent Allowance (HRA)

HRA is calculated as 50% of the basic salary.

The lowest of the following figures of HRA is exempted from the taxable income:

1. Actual HRA earned for the year.
2. Rent paid minus 10% of Basic
3. 40% of Basic (in case of Non-Metro cities) or 50% of Basic (In case of Metro cities)

Let us understand these three points with an example. If an employee’s annual basic salary is Rs. 12,500/- then HRA will be Rs. 6,250/-.

Actual HRA earned for the year - Rs. 6,250/-.
Rent paid minus 10% of Basic - Rs. 6,250/- – Rs. 1,250/- =Rs. 5,000/-
40% of basic – Rs. 5,000/-(In case of Non-Metro cities) or 50% of basic – Rs. 6,250/- (In case of Metro cities)

In all the above three cases, Rs. 5,000/- is the lowest amount. Therefore, Rs. 5,000/- is the monthly HRA amount which will be exempted towards tax.

Proof to be submitted:

Proof of occupation of the rented house for the period when the house is occupied i.e. signed rent agreement for the period when the house was occupied.
You are required to submit photocopy of all pages of the lease agreement including the back of the stamp paper and witnesses’ signature and addresses on the last page of the agreement.

If the landlord does not provide you a new lease agreement, then you are required to submit the Rent Undertaking of the new address and the latest rent receipts for that month.

Note: If an employee changes his/her residential address within a financial year then they are required to submit the updated rent agreement within 15 days of relocating to a new location.

Where to submitYou are required to submit the rent receipt of the first month of the first quarter in HR along with photocopy of the lease agreement or the Rent Undertaking form.Thereafter, you can submit only rent receipt of first month of every quarter to the Accounts Department directly.Original monthly rent receipts from April 2009 till Jan 2010.

Person / department to be contacted in case of any query: You can contact either HR or Accounts for anyquery.

Time of the year when this proof needs to be submitted: You need to submit these proofs in the beginning of the current financial year i.e. till 15 April or whenever you join the organization. In case you miss the deadline,exemption will be considered from the month of submission to the HR or else tax will be deducted from the complete HRA amount.

Last Date for Submission: January 15, current financial year (for example, 2010)

B) Medical Reimbursement (Maximum Amount – Rs. 15,000 per annum)

An employee can submit medical bills of maximum amount of Rs.15,000/- per year. Apart from submitting his/her own bills, an employee can also submit medical bills of their dependents - Spouse, Children and Parents. An employee can also submit bills of their spouse even if the spouse is working.

Note: As per Income tax act rules, females cannot take the benefit on medical reimbursement for her parents.

Where to Submit:You are required to fill bill details in the Reimbursement Claim form (available on Intranet) and submit all original bills along with the filled in reimbursement claim form to the Accounts Department.

Person / department to be contacted in case of any query: You can contact Accounts Department for any query.

Date & Time of the year when this proof needs to be submitted: You need to submit these proofs till mid of January of the current financial year (e.g. January 15, 2010), if you want to avail theexemption under this section.

C) Flexi Benefit Plan (FBP)(Maximum Amount – As defined in your salary structure)

All monthly FBP bills (only originals) must reach the Accounts Department attached along with the Reimbursement Claim form duly electronically filled and signed by an employee by 7th of next month (In case 7th of the month falls on a holiday/weekend, then next working day after 7th).
The entire reimbursements of last month will be disbursed after deduction of 6.798% taxto the employee by 15th of the current month.
If any employee submits the bills below his / her FBP limit, he/she has the option to submit the bills for the remaining amount till the end of the financial year (i.e. by 20thMarch).
Reimbursement of every month would be restricted only to the extent of the amount of invoice submitted and subject to the FBP entitlement. If any employee submits the bill exceeding his / her FBP limit, the same will be adjusted in the subsequent months but within the same financial year.
At the end of the same financial year, the employee must submit the bills for that month as well as bills for any shortfall amount in previous months. If someone is not able to submit the required bills even at the end of the same financial year, then the rest of the amount will be credited after deducting the income taxof 30.9%.
Overwriting in bills should not be there.
All the bills submitted by the employee must have the following details. In case any of the details are found to be missing, the bills will be rejected.-

a. CST/ LST/ TIN number of the vendor

b. Name and Address of the vendor

c. Telephone number of the vendor

d. Bill Number

Note: - All FBP bills are subject to physical verification by the Accounts Department and in case any bill is found to be faked/ forged, the entire annual FBP amount of the employee will be added to the taxable income for the year.

Where to Submit:You are required to fill bill details in Reimbursement Claim form (available on Intranet) and submit all original bills along with the filled in reimbursement claim form to the Accounts Department by 7th of next month.This deadline is applicable every month for all employees in different shifts.

Person / department to be contacted in case of any query: You can contact AccountsDepartment for any query.

Date / time of the year when this proof needs to be submitted: You are required to provide bills of the specified amount in any of the month. The shortfall amount will be carried forward till 20th March. After the cutoff date, the balance amount will be calculated in total tax deduction.

D) Conveyance Allowance (Maximum Amount Rs. 800 per month)

If you are using your own transport for commuting to office, then you are eligible for tax exemption of Rs. 800 permonth. If you are availing transport facility provide by company then you are not eligible for exemption for conveyance allowance and this Rs 800 will be added to your taxable income.
Where to Submit: Need not submit any bill on this behalf. Tax will be deducted from your salary, if applicable.
Person / department to be contacted in case of any query: You can contact Accounts Department for any query.

Date / time of the year when this proof needs to be submitted: NA

B.Exemption under Chapter VI A

You can submit proofs under the following heads in chapter VI A.

Section 80D - Medical Insurance

Section80DD – Maintenance/Medical treatment of Handicapped Dependent

Section 80E – Education Loan Interest Benefit

Section 80U – Handicapped/ Self-Disability

A) 80D - Medical Insurance - Maximum Amount- Rs. 15,000 or Rs. 20,000(in case of parents above 65 yrs of age)

a)Tax is exempted on Rs. 15,000 in case of Individual, Spouse, Children or Dependent parents (age below 65 years).

b)Tax is exempted on Rs.20, 000 in case of Individual, Spouse, Children or Dependent parents above 65 years (Senior citizens).

Note: - Both husband and wife cannot claim the tax benefit on the same medical insurance policy.

For example:- If husband and wife both are working, then either husband or wife can avail the benefit on the medical insurance amount i.e. If husband is paying the insurance premium amount of wife, then wife can’t claim for the benefit on her insurance as the flow of funds for the transaction has happened from husband’s account.

To claim your spouse’s medical insurance amount for tax deduction, the flow of funds for the particular transaction should happen through your account & on your name i.e. whoever pays, only one can avail tax exemption.

Proof to be submitted:-

Photocopy of the latest premium receipt by the Mediclaim Insurance Company. Receipts should be of the current year only (e.g. Apr’09 – Mar’10). Policy can be in the name of individual, spouse, children, or dependent parents.
If husband is claiming for wife’s insurance who is the policy holder and she is also working, then the husband is required to submit a NOC on letterhead from wife’s company that she is not taking benefit on the same policy.

Where to Submit: You are required to submit the latest premium receipt issued by the medical insurance company to Accounts Department.
Person / department to be contacted in case of any query: You can contact Accounts Department for any query.

Date & Time of the year when this proof needs to be submitted: You need to submit these proofs till mid of January of the current financial year (e.g. January 15, 2010), if you want to avail the exemption under this section.

B) 80DD Maintenance /Medical treatment of Handicapped Dependents

Maximum deduction allowed here is limited to Rs.50000 (<=80% disability), Rs.75000 (>80% disability).
Proofs to be submitted:

Photocopy of certificate issued by the competent medical authority in a Government Hospital, with a self-declaration, certifying the amount spent on treatment, training or rehabilitation of the handicapped dependent, or receipt of the amount paid to LIC/UTI for the policy.

In case the certificate expires and the condition of disability requires reassessment, fresh certificate is to be obtained after its expiry to continue claiming the deduction.

Where to Submit: You are required to submit latest premium receipt issued by the medical insurance company to Accounts Department.
Person / department to be contacted in case of any query: You can contact Accounts Department for any query.

Date & Time of the year when this proof needs to be submitted: You need to submit these proofs till mid of January of the current financial year (e.g. January 15, 2010), if you want to avail the exemption under this section.

C) 80E Education Loan Interest Benefit

There is no tax benefit on the principal loan amount. Actual interest paid by the employee on the loan amount is allowed as deduction, if it is a full time course and there is no capping of maximum limit.
Proofs to be submitted:

1)Letter / certificate from the Bank / Financial Institution specifying the Educational Loan.

2)Bank statement mentioning the amount of interest paid on the loan in the current year (e.g.Apr’09–Mar’10).

Proof of full time studies-Here, an employee is required to produce a full time degree/ certificate to the employer. There is no tax benefit on the principal loan amount. Tax benefit is only applicable on the interest paid for higher education in lieu of the loan taken from the bank.

Note:

Interest paid for the first 8 years on loans taken for Higher Education such as Engineering / Medical etc is exempted from tax.
Tax exemption is applicable only if loan is availed by the employee/children for pursuing his / her higher education.
Only loans availed from Financial Institution / Bank are eligible for tax exemption.

Where to Submit:You are required to submit latest premium receipt issued by the medical insurance company to Accounts Department.
Person / department to be contacted in case of any query: You can contact (check this in the entire document and fix) Accounts department for any query.

Date & Time of the year when this proof needs to be submitted: You need to submit these proofs till mid of January of the current financial year (e.g. January 15, 2010), if you want to avail the exemption under this section.

D) 80U Deduction in case of Disability-Self

Maximum deduction allowed here is limited to Rs.50000 (<=80% disability), Rs.75000 (>80% disability
Proofs to be submitted: Photocopy of certificate issued by the medical authority. In case the certificate expires and the condition of disability requires reassessment, fresh certificateis to be obtained after its expiry to continue claiming the deduction

Where to Submit: You are required to submit latest premium receipt issued by the medical insurance company to Accounts Department.
Person / department to be contacted in case of any query: You can contact Accounts Department for any query.

Date & Time of the year when this proof needs to be submitted: You need to submit these proofs till mid of January of the current financial year (e.g. January 15, 2010), if you want to avail the exemption under this section.

C.Exemption under Section 80C – (Maximum Amount – Rs.100, 000)

You can submit investment proofs for a maximum of Rs 1, 00,000 under any of the heads below. The maximum limit, if applicable, has also been mentioned.

Life Insurance Premium

PPF (Public Provident Fund)

Fixed Deposit in a bank

Investments in ULIP, Mutual Funds/ELSS, Infrastructure Bond, NSC etc.

Children Education Fees

Five Year Time Deposit in Post Office Saving Scheme

Housing Loan (Principal Loan) Repayment/ Registration/ Stamp Duty

A) Life Insurance Premium

1)Policy from any approved company by IRDA is exempted from tax.

2)Late payment fees will not be considered as premium paid.

3)Payment Receipts should be of the current year only (e.g. Apr’09 – Mar’10). Policy should be in the name of Individual, Spouse, or Children.
Proofs to be submitted:

1)Photocopy of all premium receipts issued by the Insurance Company.

2)If husband claims for wife’s premium amount paid, then he is required to submit his bank statement stating that flow of funds happened from his account and vice-versa.

Where to Submit:You are required to submit latest premium receipt issued by the lifeinsurance company to Accounts Department.
Person / department to be contacted in case of any query: You can contact Accounts Department for any query.

Date & Time of the year when this proof needs to be submitted: You need to submit these proofs till mid of January of the current financial year (e.g. January 15, 2010), if you want to avail the exemption under this section.

B) PPF (Public Provident Fund)

Provident fund can be in the name of individual, spouse, or children. Maximum exemptionallowed under this scheme is Rs.70, 000/- per annum.
Proofs to be submitted: Photocopy of stamped Challan or PPF passbook

Where to Submit:You are required to submit latest premium receipt issued by the medical insurance company to Accounts Department.
Person / department to be contacted in case of any query: You can Accounts Department for any query.

Date & Time of the year when this proof needs to be submitted: You need to submit these proofs till mid of January of the current financial year (e.g. January 15, 2010), if you want to avail the exemption under this section.

C) Fixed Deposit in a Bank

Term deposits for a minimum period of 5 years with anybank are eligible for tax exemption.
Proofs to be submitted:

Photocopy of the Receipt/certificate issued by the bank.
Certificate should be on individual’s name only. You cannot claim tax benefit on fixed deposit of yourSpouse/ Children/ Parent.

Where to Submit:You are required to submit latest premium receipt issued by the medical insurance company to Accounts Department.
Person / department to be contacted in case of any query: You can contact Accounts Department for any query.

Date & Time of the year when this proof needs to be submitted: You need to submit these proofs till mid of January of the current financial year (e.g. January 15, 2010), if you want to avail the exemption under this section.

D) investments in ULIP, Mutual Funds / ELSS, Infrastructure Bond, NSC, Postal Deposits